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RyanairGuru
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RE: Air NZ Selling Share In Virgin Australia?

Sat Apr 02, 2016 12:03 pm

Quoting aerokiwi (Reply 49):

You are spot on about airport and airfield operations. VA (well actually their contractor) staffs the ramp with just the right number of people for it to run relatively smoothly when things run on time ... which means that they are very thin on the ground the second that there is a delay. This element of their operations is still very-LCC esque, and something they seem unwilling to invest in. Qantas' operations during IRROPS is in a different league to VA, they are properly resourced so that they can deal with things go wrong.

I also agree with you on cabin service. I see it most starkly on CBR-SYD which is typically only about 30 minutes in the air. Qantas don't serve a hot dinner on that route, but they do serve a main course sized salad, one that is pretty substantial, not just two letttuce leaves. Qantas, including Cobham, can manage this, but VA sometime seem to struggle distributing cookies in time. Their flight attendants seem to lack the level of urgency that Qantas' crews have, they don't seem to adjust their service to meet time constraints. Qantas' crew might come over as brusque they're going so fast, but they get the job done. Rightly or wrongly, VA sometimes comes over as they don't care.
Worked Hard, Flew Right
 
Ryanair01
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RE: Air NZ Selling Share In Virgin Australia?

Sat Apr 02, 2016 5:08 pm

Quoting sunrisevalley (Reply 47):

Seems to me we need to know a whole lot more about Elizabeth Bryan and what makes her tick and what the other influences are in the background. Perhaps it was no more than she was able to give Luxon/NZ their comeuppance aided and abetted by EY and SIN. By the way, who are the other directors and how are they aligned?

I suspect Elizabeth Bryan has a difficult job. Virgin Australia's shareholders are major airlines in their own right, all with different approach (read degree of arrogance) and priorities. I should imagine the perception that ANZ had taken Borgetti's scalp would have been quite damaging to the dynamic, suggesting ANZ had more power than the other shareholders, which would risk some very dysfunctional reactions.

Having said all of that, with a bloated wide body fleet (both 777 and A330 - when it is hard to see a commercial reason for either), both A320's and 737's, plus a very inconsistent customer product offer, VA looks like a mess and needs some new direction.
 
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mariner
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RE: Air NZ Selling Share In Virgin Australia?

Sat Apr 02, 2016 6:50 pm

Quoting aerokiwi (Reply 49):
Well, yeah so why the public dummy spit? The share price has only been made worse by the very public nature of this. NZ cutting off it's nose to spite its face?

I don't know how they could have done it quietly. Rules are rules, and the ASX had to be informed. It was the ASX that issued the first press release - about the trading halt - and as soon as that happened it all hit the fan.

Unsurprisingly, the share price dropped 9% to 36 cents on news of that trading halt, before the reason was known, and has pretty much stayed there at 36 cents since.

Quoting Ryanair01 (Reply 51):
I suspect Elizabeth Bryan has a difficult job.

She's a tough, fiercely intelligent woman, and no shrinking violet. She gave an interview a couple of weeks ago, publicly calling the directors of Virgin into line, and specifically Mr. Luxon as the last remaining CEO off a foreign airline on the board.

I'll cherry pick, because it's a long article and she chooses her words very carefully, but the sentiment is expressed in the headline.

http://www.theaustralian.com.au/busi...y/1e5bd4e2ada1d31c7413d23ce8b7ed34

"Elizabeth Bryan lays down law on Virgin Australia board

It is a very different style to the one that marked the chairmanship of her predecessor Neil Chatfield, who apparently preferred to let Virgin chief executive John Borghetti deal with the delicate issue of managing his shareholders.

In the past, Luxon, Branson and Hogan have spoken publicly about Virgin’s strategy, although the Hogan has said nothing for almost two years. And while Bryan values immensely the operational expertise the airline shareholders bring to the board table, it seems she will not countenance loose-lipped directors in the future.


She goes on to discuss Luxon's position, as the last remaining airline CEO on the board, and she admits that he's in a difficult position - but that's how it is.

The consensus is that the unhappiness began when Luxon publicly said it was time for Virgin to get profitable, about a year ago. That cut to the heart of the matter at Virgin, and is now seen by many as the first shot across the bow by Luxon.

mariner

[Edited 2016-04-02 12:20:56]
aeternum nauta
 
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mariner
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RE: Air NZ Selling Share In Virgin Australia?

Sat Apr 02, 2016 10:13 pm

Another very good article in the Financial Review, mostly about John Borghetti defending his plans and also what the eventual shakeout might be - Singapore or Etihad or both, with the usual dark horses of a Chinese airline or Delta.

It also confirms (i) several of the rumours about the relationship with Borghetti and Luxon (ii) that the Air NZ/Virgin code share will continue and (iii) that Virgin is likely to need another injection of capital from its key shareholders:

http://www.afr.com/business/transpor...s-aviation-shakeup-20160331-gnvds9

"Virgin shareholder spat sparks aviation shake-up

Several weeks ago Air New Zealand's chief executive, Christopher Luxon, stood up in a private meeting and called for Virgin boss John Borghetti to resign. He has no such plans."


As to the possible future:

"The most likely scenario, though, looks like either Singapore or Etihad, or both, acquiring the shares. While Singapore and Etihad are competitors operationally, their sovereign wealth fund owners are said to have a close relationship.

Several sources who know Hogan say he still supports Borghetti and has no plans to launch a takeover for Virgin, particularly when Etihad faces its own challenges in its key markets in Europe and the Middle East.

Borghetti is also close to Singapore Airlines, which wasn't saying much this week, except that it has a "strong relationship" with Virgin Australia.

"Neither of them want another airline on the register. It was combative and unhelpful and un-productive. If I was Singapore or Etihad I think they are more likely to work it out between them," a senior aviation executive says"


I guess we'll see.

mariner

[Edited 2016-04-02 15:17:20]
aeternum nauta
 
aryonoco
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RE: Air NZ Selling Share In Virgin Australia?

Sun Apr 03, 2016 5:10 am

A few articles here have alluded to the possibility of NZ entering the domestic Australian market, especially the golden triangle between Sydney, Melbourne and Brisbane, on their own right.

What are the chances of this happening, in the next 3-5 years?
 
smi0006
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RE: Air NZ Selling Share In Virgin Australia?

Sun Apr 03, 2016 6:14 am

I find the VA product very cheap on transcon. On a route that long I much rather take QF. The whole onboard service is slicker and better run, can never put my finger on what, but VA feels cheap. And yet price wise, difference is minimal.

Quoting aerokiwi (Reply 49):
has been a long term problem left to linger (20 minutes waiting at an empty gate for an airbridge operator - come on). Am I right in saying this has been contracted out?

I think SYD and MEL are the only VA manned ports, all others (major and regional) are aerocare. But their lack of automated bag drop like QF is pathetic. Especially in Sydney. They have proved it in Perth, now let's see it rolled out elsewhere. Clear time frame for east coast implementation.

Quoting Ryanair01 (Reply 51):
Having said all of that, with a bloated wide body fleet (both 777 and A330 - when it is hard to see a commercial reason for either), both A320's and 737's,

How many A320s do they have 2? I believe they are ancient, why not get rid of them? Or expensive leases? Skywest purchase made sense at the time, but seems like an expensive move now that added a fair amount of complexity.

Quoting aryonoco (Reply 54):
NZ entering the domestic Australian market, especially the golden triangle between Sydney, Melbourne and Brisbane, on their own right.

I can't see this happening, but I would love to see the 767s on AU domestic runs!! Not sure any terminals have space these days for another significant operator, wide or narrow body. But the NZ seats to suit product would be a very appealing product in Australia, nice and clear unlike VAs mess.
 
zkncj
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RE: Air NZ Selling Share In Virgin Australia?

Sun Apr 03, 2016 6:32 am

Quoting smi0006 (Reply 55):
How many A320s do they have 2? I believe they are ancient, why not get rid of them? Or expensive leases? Skywest purchase made sense at the time, but seems like an expensive move now that added a fair amount of complexity.

Plus the 14x A320 that Tiger operate, adding overall cost to the fleet operations.

Quoting aryonoco (Reply 54):
What are the chances of this happening, in the next 3-5 years?

Depends how deep there pockets are, at the moment they might be very deep.
 
kiwiandrew

RE: Air NZ Selling Share In Virgin Australia?

Sun Apr 03, 2016 7:53 am

I think it would be very unwise for NZ to enter the AU domestic market in their own right any time soon. It's highly competitive, they would antagonise both SQ and VA, QF would probably boost JQ's presence in the New Zealand domestic market even further, and while there have been a number of changes of government over the years, don't forget that a previous Australian government reneged on allowing NZ to fly domestically within Australia, would the current government be any more likely to honour the single aviation market ? Sounds like a great way to make enemies and lose money.
 
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sunrisevalley
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RE: Air NZ Selling Share In Virgin Australia?

Sun Apr 03, 2016 2:11 pm

Quoting mariner (Reply 53):
I guess we'll see.

Thanks so much for the hours you have spent piecing this all together. It is a fascinating story with no doubt more twists and turns to come before the fat lady sings. From NZ's perspective the best outcome would be some competitive bidding for their stake . No doubt the job of the pedlars of their position is to get competitive bids but the suggestion that there is a close relationship between the EY and SIN sovereign wealth funds appears to make this more difficult. Needs a real wild card outside bid to break the process open. When push comes to shove it is hard to believe that SIN will fold in the face of say a Chinese bidder. They are so close to achieving their goal . Probably the best part of the outcome thus far is that VA and NZ have recognized the value of their present operating arrangement and done nothing to upset it. Shows pragmatism at the highest levels.
 
MIflyer12
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RE: Air NZ Selling Share In Virgin Australia?

Sun Apr 03, 2016 2:54 pm

Quoting aryonoco (Reply 37):

DL should be able to make their one single daily flight to SYD work by themselves. If they can't, they should leave the market.
Quoting eta unknown (Reply 28):
DL has only one flight a day between 2 large population centers- if you need a JV to support that then you have a problem and shouldn't be playing in this market.

AA didn't start its SYD flight without a JV, either.

Whether DL thinks the VA feed and support for BNE and destinations beyond SYD is worth an investment north of $100 million is yet to be seen.
 
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jetfuel
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RE: Air NZ Selling Share In Virgin Australia?

Sun Apr 03, 2016 6:22 pm

HOT rumour on another source is CX will buy VA
Where's the passion gone out of the airline industry? The smell of jetfuel and the romance of taking a flight....
 
kiwiandrew

RE: Air NZ Selling Share In Virgin Australia?

Sun Apr 03, 2016 7:39 pm

Quoting jetfuel (Reply 60):
HOT rumour on another source is CX will buy VA

I saw that, but if it was the same forum I looked at there was absolutely no source provided although the person confidently stated it as fact.
 
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jetfuel
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RE: Air NZ Selling Share In Virgin Australia?

Sun Apr 03, 2016 7:45 pm

Quoting kiwiandrew (Reply 61):
Quoting jetfuel (Reply 60):
HOT rumour on another source is CX will buy VA

I saw that, but if it was the same forum I looked at there was absolutely no source provided although the person confidently stated it as fact.

I cant really see SQ or EY agreeing
Where's the passion gone out of the airline industry? The smell of jetfuel and the romance of taking a flight....
 
anstar
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RE: Air NZ Selling Share In Virgin Australia?

Sun Apr 03, 2016 8:04 pm

Quoting eta unknown (Reply 28):
but VA is a financial sink hole- WHY would DL invest money into a financially losing proposition.
Quoting jetfuel (Reply 62):

I cant really see SQ or EY agreeing

Given they dont have controlling shares why would they have to agree. Im sure we could say that SQ and NZ prob didnt want EY buying shares but it didnt stop them.
 
kiwiandrew

RE: Air NZ Selling Share In Virgin Australia?

Sun Apr 03, 2016 8:08 pm

Quoting anstar (Reply 63):
Quoting jetfuel (Reply 62):

I cant really see SQ or EY agreeing

Given they dont have controlling shares why would they have to agree. Im sure we could say that SQ and NZ prob didnt want EY buying shares but it didnt stop them.

I think the poster meant they couldn't see SQ or EY agreeing to a CX takeover of VA, not that they couldn't seem them agreeing to take over NZ's stake ( as you rightly said, I don't think they have any say in who purchases those shares) .
 
deltal1011man
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RE: Air NZ Selling Share In Virgin Australia?

Sun Apr 03, 2016 8:18 pm

Quoting eta unknown (Reply 40):

I clearly do, but it's obvious from your own viewpoints that you, perhaps, do not. One moment you say DL WILL expand into Australia, then you change your mind and say IF they do.

I didn't say IF they do, I said If and when.
I am pretty sure they will, but we could wake up tomorrow and Delta shut down. Unlikely but possible. I'm not a big fan of "for sure" in this industry.

Quoting eta unknown (Reply 40):
AM (DL's own backyard)

Mexico isn't in DL's back yard.
more importantly DL doesn't "have" to invest into AM to lock up a codeshare and a JV. That is something AM wants either way.

VS was the only purchase DL "had" to make. AM, GOL (which you keep leaving out and is VERY comparable to VA), MU aren't purchases they have to make. Its a safe guard but its also a way for DL help the other airlines and the other airlines to help DL.

Quoting eta unknown (Reply 40):
As many have said above, if you can't fill one 772 on SYD-LAX, you best get out of the kitchen.

So DL and AA both need to "get out of the kitchen" then?

Thats dumb. Feed helps any flight. Like I said about AKL, it might only be just a tiny bet of help, but its help.
DL and VA didn't just renew their JV because DL doesn't need VA. If VA international is as bad as anet says it is then it makes zero sense for DL to renew the partnership. zero.

Quoting kiwiandrew (Reply 44):

A dark horse which no one has mentioned so far....might UA consider buying out NZ's stake? While they would be unlikely to get approval for a JV with VA it would give them feed in Australia and maybe cause the VA/DL JV to collapse. UA recently bought a stake in Azul, so they are prepared to look outside the US. I don't think this is a likely outcome, but I guess it's possible . Thoughts ?

and this is exactly why I could see DL buying into VA.

Quoting eta unknown (Reply 40):
tell me, do you know something about DL's SYD flight that you aren't sharing?

like what? I don't know anything about it. Couldn't even tell you what times it operates or the flight numbers. Only thing I know is they have(had?) some cargo contract that is so lucrative they have flown empty legs of LAX-SYD just for the cargo. (only twice i think but still, you just don't see PAX airlines doing that for cargo)

I do know what DL is trying to do with its network and partner airlines. I do know that VA is very important to DL and what DL wants to do later down the road. You might want to listen to DL management speak sometimes, all of its JV and ownership stakes are being done for a reason. Right now DL has an ownership stake and/or JV and/or hub in 7(iirc) out of 10 top international to the US market places. The other two DL is working on with codeshares (9W and WS). The JVs bring in almost 15 Billion (with a B) in revenue a year.

Now I don't know if DL will buy into VA but if they did I would completely understand why. They have said they aren't putting any money GOL because of all of its issues which is pretty comparable to VA. So maybe they wont.
My guess is if it sounds like they have to so they can save the relationship they will. If EY and SQ plan on keep VA as is JV wise then they might leave it alone.
 
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mariner
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RE: Air NZ Selling Share In Virgin Australia?

Sun Apr 03, 2016 8:40 pm

Quoting Deltal1011man (Reply 65):
If VA international is as bad as anet says it is then it makes zero sense for DL to renew the partnership. zero.

The fact that Virgin's international arm is unprofitable doesn't mean it isn't helpful to Delta, it may simply mean that SYD-LAX flights, say, are okay in terms of loads but that Virgin's costs are unsustainably high.

Quoting Deltal1011man (Reply 65):
Now I don't know if DL will buy into VA but if they did I would completely understand why.

Sure, I could, too, but I can't see that just taking Air NZ's minority stake is a deal of help. If - iIF - they did, I think they would want control, over 50%, so that they wold have some meaningful say over what Virgin was doing, something that Air NZ's minority 26% stake signally failed to do.

I think we can assume the Delta has a pretty good relationship with Branson/Virgin Group, so in that sense they might already have Branson's 10% stake in Virgin Australia in their pocket.

Then, I guess, it would depend on Delta's relationship with (a) Singapore (b) Etihad and (c) how much Delta is prepared to pay.

Most people, not all, think that Singapore will emerge from this as "the winner" - as I suppose I do - but I think it would be a stunning, game-changing move if Delta swooped in and got the majority (over 51%) holding.

Quoting aryonoco (Reply 54):
A few articles here have alluded to the possibility of NZ entering the domestic Australian market, especially the golden triangle between Sydney, Melbourne and Brisbane, on their own right.

The airline will do what it's gunna do, but such a move would chill my blood.

I'd much rather see Air NZ find other ways to increase its Australian position, such as more use of the "beyond" rights, using Australia as a springboard to Asia, say.

Quoting sunrisevalley (Reply 58):
When push comes to shove it is hard to believe that SIN will fold in the face of say a Chinese bidder. They are so close to achieving their goal

Given the several times Singapore has tried to become a player in the market, I agree.

mariner

[Edited 2016-04-03 14:16:18]
aeternum nauta
 
Gasman
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 12:51 am

Quoting aryonoco (Reply 54):
A few articles here have alluded to the possibility of NZ entering the domestic Australian market, especially the golden triangle between Sydney, Melbourne and Brisbane, on their own right
Quoting mariner (Reply 66):
The airline will do what it's gunna do, but such a move would chill my blood.

Why though? Is it not time to acknowledge that this is precisely what needs to happen?

NZ's JV foray into the Australian market in the form of Ansett was an unmitigated disaster and VA is looking like going the same way, albeit to a much smaller extent. The reasons for the failings of both were due to factors largely outside NZ's control. Over-unionised and over regulated (Ansett) vs. half-arsed and badly managed (VA). Given that a JV with Australia's sole reputable blue chip carrier (QF) is next to impossible and presence in the Australian domestic market is considered a necessity, it might just be time to concede that NZ needs to do it alone - using its own branding or a JQ equivalent.
 
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sunrisevalley
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 2:36 am

Quoting Gasman (Reply 67):
and presence in the Australian domestic market is considered a necessity, it might just be time to concede that NZ needs to do it alone - using its own branding or a JQ equivalent.

where is the consensus of necessity? There are more than enough players muddling along domestically in Australia , sort of a Heinz 57 varieties approach with something for everyone if they can get their heads around the combinations and permutations of what is being offered by whom and on which day. I can see a limited use of the rights to which a NZ carrier is entitled to countries to the west but it seems to me that the present SQ arrangement puts a ribbon around these rather neatly. The possible exception is service to JNB via MEL. NZ could put a EDTO 300min 789 on that service in a heart beat if they wished . Surely QF will when they get enough 789's.
 
Gasman
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 3:30 am

Quoting sunrisevalley (Reply 68):
where is the consensus of necessity? There are more than enough players muddling along domestically in Australia

I agree - it's not obvious to me either.

But if you look at the behaviour of NZ, who should know better than you or I what's good for them, it would seem the necessity is there. They didn't buy Ansett for fun, and a major financial interest in VA wasn't necessary for a mere codeshare arrangement. So they clearly believe the necessity is there. As is reflected in this article

http://www.nzherald.co.nz/business/n...ticle.cfm?c_id=3&objectid=11616215

"Air New Zealand needs to have an alliance with a domestic Australian carrier because flying to and from Australia is such a key market for it."

So NZ would seem to believe they need a presence in Australia, and furthermore a simple codeshare arrangement isn't enough - they need a financial stake and a controlling interest in that partner's infrastructure. Two forays involving existing carriers have failed. It's therefore time for them to consider establishing their own presence from scratch.
 
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vhtje
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 3:31 am

Quoting mariner (Reply 66):
Quoting aryonoco (Reply 54):
A few articles here have alluded to the possibility of NZ entering the domestic Australian market, especially the golden triangle between Sydney, Melbourne and Brisbane, on their own right.

The airline will do what it's gunna do, but such a move would chill my blood.

I agree. Why would NZ do this? It would be nothing but a bloodbath for them. NZ's reputation over AN - at least in terms of any domestic Australian operation - took a battering, and is still pretty toxic in some eyes, even 15 years on. Probably enough to fatally harm any mooted Australian domestic operation.
I only turn left when boarding aircraft. Well, mostly. All right, sometimes. OH OKAY - rarely.
 
mandala499
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 3:36 am

Quoting CXfirst (Reply 2):
and the de-investment was solely so NZ could focus on their own airline.

Sounds like the AN/NZ days...

Quoting aerokiwi (Reply 12):
Priorities as I see them:

Again, sounds like the AN days...

Is history repeating itself? No... but I can't help to see the similarities (personal opinion)...
When losing situational awareness, pray Cumulus Granitus isn't nearby !
 
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mariner
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 3:48 am

Quoting vhtje (Reply 70):
I agree. Why would NZ do this?

I can't think of any good reason. The working relationship with Virgin Australia continues and putting the pieces together, it looks as if that was made a condition of the deal to quit the shareholding and yet still provide the loan.

There's a curious article in the Herald today, by someone who claims that the decision to quit the shareholding was "hastily" put together:

http://www.nzherald.co.nz/business/n...ticle.cfm?c_id=3&objectid=11616215

"It was obviously a hastily made decision"

Whereas I think it's been brewing for some time and that all the ducks were put in a row for the eventuality, although I agree that the request for the loan may have been the capper that made it happen - the straw and the camel's back.

mariner

[Edited 2016-04-03 20:51:46]
aeternum nauta
 
xiaotung
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 4:34 am

The VA investment was made at a time when EY was buying regional airlines all over the world. I think if NZ didn't make the move, EY would have owned VA now. What NZ didn't want was another EK/QF alliance across the Tasman in the form of EY/VA. If not mistaken NZ were losing money on thr Tasman before the VA alliance. So the investment was quite justifiable, not to mention it would have helped bring SQ to the table with the later SQ/NZ alliance.

Now leaving the VA register NZ again will be vulnerable. Tough call.
 
DavidByrne
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 4:39 am

Quoting sunrisevalley (Reply 68):
where is the consensus of necessity? There are more than enough players muddling along domestically in Australia

I could not see NZ seek to become a major player in Australia in its own right, and would not expect it to operate any Australian domestic services unless the codeshare arrangement with VA fell apart or was not renewed at the appropriate time. It would be a brave VA that would willingly forgo the business brought to it by NZ, so I expect that barring a major falling out, the codeshare will be renewed and NZ will have no need to operate its own metal domestically within Australia.

The question arises, though, as to what would happen if NZ finds itself alone and a wallflower in the Australian domestic dance. In that circumstance (and that alone) I could see NZ establishing a limited Australian domestic feed to its Transtasman and beyond services. Most of the "beyond" services are connected to directly via AKL , so my expectation is that the services NZ would need to operate domestically within Australia would be very limited indeed.

Services that might be required could be:
* SYD-MEL - say 4x daily for on-line stopover traffic, topped up with local traffic attracted by s2s (probably discounted)
* SYD-BNE - say 4x daily ditto
* MEL-BNE - say 3x daily ditto
* PER-MEL or SYD - daily ditto (east cost to PER around 0930, back to connect with evening service to NZ)
* HBA-MEL or SYD - daily to feed into mid-morning MEL/SYD departures and returning in the evening
* ADL-MEL or SYD - daily ditto
* CNS-BNE - daily ditto, providing also off-season services via BNE to AKL, WLG, CHC, ZQN
* MCY-SYD - daily ditto, providing also off-season services via SYD to AKL, WLG, CHC, ZQN
* OOL-SYD - daily ditto, providing on-line service to WLG, ZQN

Ideally, all these services would operate from international terminals, and go through customs and immigration at the start/end points, using the kind of "D-sticker" system that QF uses (or has used?). Otherwise there would be significant frustration for passengers transiting SYD/MEL/BNE in either direction.

Total commitment of aircraft: Maybe five-six aircraft plus a spare

Advantages:
* NZ can maintain its position as a carrier able to market itself seriously to the whole of (well, most of) Australia
* Much-improved network resilience for NZ when aircraft go tech and/or weather results in delay
* The possibility of providing same-plane services on (say) HBA-MEL-PER which might provide a marketing advantage, albeit in a small market
* Should the carrier consider international flights westbound from Australia, it has a ready-made feeder network to support these.

Disadvantages
* Operating a half dozen aircraft comes at a cost that needs to be recouped, and this may not be easy

As noted, this is a scenario that would be a fall-back position in the worst-case scenario where NZ and VA fall out completely. I can't see the network growing any more than this (unless to add ports like DRW, TSV to the network via SYD/BNE).
This is not my beautiful house . . . This is not my beautiful wife
 
aryonoco
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 7:28 am

Quoting vhtje (Reply 70):
NZ's reputation over AN - at least in terms of any domestic Australian operation - took a battering, and is still pretty toxic in some eyes, even 15 years on.

NZ's reputation is toxic in Australia? Really?! I don't know which part of Australia you're talking about, but from where I sit, NZ has an excellent reputation in Australia. Its international flights are very well regarded, and many Australians ONLY use NZ for flying to US (especially those not in SYD who don't have as many non-stop options, and many prefer a transfer in AKL to SYD).

I moved to Australia 9 years ago, and there is now a whole generation of Australians, both native born as well as immigrants, who have never even heard of AN. Most people I know regard NZ as a quality well-run airline, on par with SQ and CX.
 
Airvan00
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 7:37 am

NZ is toxic amongst the road warriors, ( the ones who lost their Golden Wing points)
The general public and infrequent flyers don't have a problem with NZ, but unfortunately for the airline, those people are not the big spenders that all airlines crave.
 
aryonoco
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 9:29 am

I've been thinking a bit today about the rumours that CX might be interested in NZ's shares.

Considering that CX has reached its maximum frequency to Australia for a while now, and has been made to (reluctantly) replace A330s with 777s to grow in the market (we know that CX prefers frequency), VA could very well be an escape clause that would instantly alleviate all their problems in Australia, and become a major thorn on QF's side.

This would only work if CX was able to out muscle SQ of course. Say CX bought both NZ's shares as well as Virgin Group's shares (which are probably available at the right price). That would make CX by far the biggest shareholder, and give it lots of influence in the board room and over the direction of the company. It is not inconceivable for me that CX and EY could then work out something between themselves (they don't really compete on many routes, they compete less than SQ and EY do) and basically force SQ out.

VA would then be a perfect vassal for CX in Australia. Its current international fleet can all be directed to fly to HK, and who knows what other plans CX might have for such an entity.

Is this too far fetched? Or is there something to these rumors?
 
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mariner
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 10:05 am

Quoting aryonoco (Reply 77):
VA would then be a perfect vassal for CX in Australia. Its current international fleet can all be directed to fly to HK, and who knows what other plans CX might have for such an entity.

Is this too far fetched? Or is there something to these rumors?

I guess this one is as valid as all the other rumours floating around, but they rely) on one thing - passivity by Singapore., which, given its long-held ambitions for a greater role in its Australians operations, seems odd.

Let me (or the Fin Review) throw another one into the mix. News is out that Alaska is about to buy Virgin America for $2.5 billion. This would give the Virgin Group a nice swag of loot and so we have:

http://www.afr.com/brand/chanticleer...in-australia-stake-20160404-gnxncd

"Could Richard Branson buy Air NZ’s Virgin Australia stake?"

Well, sure, yes, he could, but I'm not sure why, except for hubris, which we can never discount with Branson - SRB.

SRB seems to love starting airlines, but he doesn't seem so keen on running those airlines - Virgin Express, Virgin Sun, Virgin Nigeria, even Virgin America apparently, and he has sold down his interest in Virgin Australia.

From the article:

"The British billionaire is seen as more of a seller than a buyer although he is notoriously opportunistic. It is not outside the realms of possibility he would consider bumping up his stake if he thought he was getting it for a bargain.

Branson doesn't really need Virgin Australia though. Like many of its joint ventures and investments, Virgin Group receives royalty payments from the airline for using the powerful Virgin brand.

But any third party airline that looks at the opportunity will be chastened by Air NZ's experience. Buying into an airline that keeps asking you for more money is not an attractive proposition."


So sure, maybe SRB would like to buy what he has already sold, but he has to be aware (or Virgin does) that another capital injection will almost certainly be necessary and I wonder why he;d want back in - except for hubris.

The article makes another interesting point though:

"It seems safe to assume Air NZ must have had some idea before it made the announcement as to who might buy its stake. Its best chance of getting a good price is to leverage competition with existing shareholders but it might also have a third party in mind which is willing to pay a good price."

Why is partly why I don't believe the Air NZ was spur of the moment. I'd be pretty sure they have at least some clue of what is likely to happen.

mariner
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travelhound
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 10:56 am

Quoting mariner (Reply 78):
"It seems safe to assume Air NZ must have had some idea before it made the announcement as to who might buy its stake. Its best chance of getting a good price is to leverage competition with existing shareholders but it might also have a third party in mind which is willing to pay a good price."

I just can't see this as being the case. Any new foreign shareholder coming in to buy Air New Zealand's full 26% stake would new FRB approval. We also have to remember any new shareholder would initially be limited to a 20% voting share stake.

Any new shareholder wanting to take a strategic controlling stake at best is only going to be the number three shareholder.
 
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 11:13 am

Quoting travelhound (Reply 79):
I just can't see this as being the case. Any new foreign shareholder coming in to buy Air New Zealand's full 26% stake would new FRB approval.

Sure they would. I think what the article is suggesting is that there may have been "expressions of interest" - nothing more. That's not unusual.

Quoting travelhound (Reply 79):
We also have to remember any new shareholder would initially be limited to a 20% voting share stake.

Unless they launch a full takeover. Equally, the present shareholders (Etihad/Singapore/Branson) cannot increase their holding by more than 3% every six months, either - unless they launch a full takeover.

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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 11:17 am

Quoting mariner (Reply 72):
The working relationship with Virgin Australia continues and putting the pieces together, it looks as if that was made a condition of the deal to quit the shareholding and yet still provide the loan.

I think the working relationship continues for now, but watch this space. As for the loan, undoubtedly the purchaser of the shares will also repay NZ.
 
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 12:04 pm

I think one thing a lot of people have forgotten in thee excitement to come up with evey possible theory is that NZ suggested that they could unload them on the open market. That would suggest that they didn't have a buyer lined up to take their holding en mass (unless they're playing hardball of course).
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 1:22 pm

Quoting RyanairGuru (Reply 82):
I think one thing a lot of people have forgotten in thee excitement to come up with evey possible theory is that NZ suggested that they could unload them on the open market

Only as one of the options and a last choice one at that. I am certain NZ have identified all the options and ascribed probabilities against them. Today I do not see NZ as the country bumpkin of the Selwyn Cushing / Gary Toomey era.
 
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 7:33 pm

Quoting RyanairGuru (Reply 82):
I think one thing a lot of people have forgotten in thee excitement to come up with evey possible theory is that NZ suggested that they could unload them on the open market. That would suggest that they didn't have a buyer lined up to take their holding en mass (unless they're playing hardball of course).

I started my involvement here by saying exactly that:

Quoting mariner (Reply 29):
As it stands at the moment - and assuming they sold all their shares on the open market at the current price of 36 cents per share - Air NZ would take a hit of more than $120 million..

And I'd be surprised if they do have a buyer lined up, although they may have "expressions of interest" - a starting point to some complex negotiations.

The package is fraught with problems, even on the open market. It may prove too difficult for any potential buyer, unless that buyer is ready to go in boots and all and take over Virgin, or align with a group takeover of Virgin.

IF Air NZ sells on retail market to, I dunno, a few thousand small shareholders, how is Air NZ's latest loan divvied up? Does each small shareholder have to pay (say) 36 cents, or even 40, and then pay down a pro rata percentage of the Air NZ loan as well? Or does Air NZ just wear it, and hold the loan in order to let the small shareholders off the hook? Remembering that the loan is unsecured.

As above, how does any potential buyer get around the rules governing the purchase? Neither Etihad, Singapore nor Branson can buy more than 3% now - and even that has to get pre-approval - and then another 3% in another six months, which also has to be pre-approved.

If the third party does buy 20%, does Air NZ hang on to its other 6% until that the third party can buy it, again, in 3% increments?

So curiously, a buy-out of Virgin is the other simple way to do it, or, alternatively, Air NZ sells the shares on the retail market. But they don't really need the help (and cost) of two finance houses, Credit Suisse and First NZ Capital, to achieve that, so it looks as if they are hoping for an institutional investor, with deep pockets - and either a lot of patience or high ambitions.

mariner

[Edited 2016-04-04 12:48:14]
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coolian2
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 11:20 pm

I wish NZ would take VA in full. Damn the costs.

Why? They'd be ruthless. That airline would turn a huge profit in 24 months. We wouldn't have the VA board who don't know what to do.

I assume I'm wrong, but are there ownership laws that stop them?
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 11:47 pm

Quoting coolian2 (Reply 85):
I wish NZ would take VA in full. Damn the costs.

Why? They'd be ruthless. That airline would turn a huge profit in 24 months. We wouldn't have the VA board who don't know what to do.

I assume I'm wrong, but are there ownership laws that stop them?

The last time NZ did that (with AN) they almost went broke that the NZ government had to step in by taking the airline back to state ownership.

Also didn't help that the private entity controlling NZ at the time were fully aware of AN's financial situation but used their first rights refusal to block SQ from buying the 50% stake of AN from News Corp at the time.
Subsequently SQ bought 25% of NZ.

It was believed to be a matter of egos running NZ at the time.
 
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 11:51 pm

Is it just me or this equity stake is DL's to lose ? 26% stake for "Delta Sydney" and 49% for "Delta Heathrow" seems to be quite complimentary, while simultaneously preventing any chance of VA of falling into the hands of Star.
 
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RE: Air NZ Selling Share In Virgin Australia?

Mon Apr 04, 2016 11:54 pm

Quoting coolian2 (Reply 85):
I wish NZ would take VA in full. Damn the costs.

In reality it should be the opposite way around.

A cashed up and viable VA would be a fair more formidable competitor than ANZ would ever be. With a mainline fleet of 54 aircraft it's ownership of a 110 mainline fleet VA was always a bit of an oddity.

With a cash injection and strategic ownership by another airline (SIA), VA might be buying ANZ shares in a couple of years time.
 
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RE: Air NZ Selling Share In Virgin Australia?

Tue Apr 05, 2016 1:48 am

Quoting sq256 (Reply 86):
The last time NZ did that (with AN) they almost went broke that the NZ government had to step in by taking the airline back to state ownership.

Also didn't help that the private entity controlling NZ at the time were fully aware of AN's financial situation but used their first rights refusal to block SQ from buying the 50% stake of AN from News Corp at the time.
Subsequently SQ bought 25% of NZ.

It was believed to be a matter of egos running NZ at the time.

with respect this hearking back to ancient history is a waste of bandwidth. What happened in Cushings time would be virtually impossible today given the Government oversight and major interest in NZ. Without putting too fine a point on it I don't see a small town accountant in the same management league as the former president of Unilever, Canada.
 
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RE: Air NZ Selling Share In Virgin Australia?

Tue Apr 05, 2016 2:05 am

Quoting sq256 (Reply 86):
The last time NZ did that (with AN) they almost went broke that the NZ government had to step in by taking the airline back to state ownership.

Also didn't help that the private entity controlling NZ at the time were fully aware of AN's financial situation but used their first rights refusal to block SQ from buying the 50% stake of AN from News Corp at the time.
Subsequently SQ bought 25% of NZ.

It was believed to be a matter of egos running NZ at the time.

I firmly think the NZ culture now would be exactly what VA needs. I don't think for a second they'd go the Ansett way.

NZ is too ruthless for that. Partly that's why it's a shame they won't take the risk.

QF isn't ripe to take anymore, but the #2 spot will get you money. I think it would work.
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RE: Air NZ Selling Share In Virgin Australia?

Tue Apr 05, 2016 2:15 am

Quoting coolian2 (Reply 90):
NZ is too ruthless for that. Partly that's why it's a shame they won't take the risk.

Perhaps they will if they are unable to dispose of their interest at a satisfactory price. Let Luxon loose in VA to clean house. It is hard to judge the depth of management in VA also if NZ has a depth that would allow them to split up the present team to put the right people in place in VA.
 
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RE: Air NZ Selling Share In Virgin Australia?

Thu Apr 07, 2016 9:01 pm

^Interesting post, thanks, Mariner. To me it would be ironic if an SQ takeover of NZ's stake resulted in a leaner, healthier VA stripped of the longhaul services which have ( I believe) been largely responsible for the airline's underperformance.
 
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RE: Air NZ Selling Share In Virgin Australia?

Thu Apr 07, 2016 9:12 pm

Quoting coolian2 (Reply 85):

I wish NZ would take VA in full. Damn the costs.

Why? They'd be ruthless. That airline would turn a huge profit in 24 months. We wouldn't have the VA board who don't know what to do.

I see totally the opposite. NZ have more than enough problems with JQ chomping on regional routes and AA/UA coming in from SFO and LAX ... all these previous monopoly routes that will now see competition and NZ now need to refocus on their OWN operations.
 
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RE: Air NZ Selling Share In Virgin Australia?

Thu Apr 07, 2016 11:35 pm

Quoting mariner (Reply 92):
Not to get excited, it;s a very small move, lifting Singapore's stake from 22.8% to 23.11%. But it also has approval from the FIRB to lift its stake again to 25.9%, although it has not done so yet

In my view this is a move that suggests a break in the status quo. It would seem to me to deny VA international rights that they presently have would be a denial of justice. I can see staged limitations on future expansion in line with market growth but to deny what they already have is over the top.
 
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RE: Air NZ Selling Share In Virgin Australia?

Thu Apr 07, 2016 11:46 pm

Quoting mariner (Reply 92):
The flying kangaroo is viewed as unlikely to reject outright the idea of a Singapore takeover of Virgin, but it could validly question whether Virgin should keep its international traffic rights in that scenario."

I think the strategic value of having a long haul business would diminish if SIA took control of VA.

I am going on memory here, but (if I remember correctly) one of the original reasons touted for having an international operation was to diversify the currency base (i.e. $US). the reason being this could act as a natural hedge to fluctuations in the Australian dollar.

With SIA already earning a lot of its incomes in $US this element of the VA International strategy becomes redundant.

I think what this all points to is that ANA needs to be revised. There is and should be real benefits for the Australian economy with an ANA that allows more competition. It also highlights the need for QSA to be axed.

...and while we are at it, if we are going to do these two things, we might as well include New Zealand into any future framework and open up the skies between the two countries.

I can only see good news for VA's current woes!
 
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 08, 2016 12:50 am

Quoting travelhound (Reply 96):
There is and should be real benefits for the Australian economy with an ANA that allows more competition.

Absolutley.

Quoting travelhound (Reply 96):
It also highlights the need for QSA to be axed.

Again, absolutely. I really don't understand why this vestigial shackle is still around QF's ankles.

Quoting travelhound (Reply 96):
and while we are at it, if we are going to do these two things, we might as well include New Zealand into any future framework and open up the skies between the two countries.

And once again, absolutely agree.

It's interesting that these steps are so common sense to all of us who pay any attention to the aviation industry. From a national policy point of view, these are all very small reforms but they would have a significant impact on this industry, and yet government after government has failed to implement these reforms even though they enjoy broad support amongst the stakeholders.

If we as a country can't do really simple things like reforming/repealing the QSA, it makes me wonder, how are we ever going to tackle the huge challenges that are waiting for us in the 21st century (climate change, aging population, etc)?
 
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mariner
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 08, 2016 12:55 am

Quoting travelhound (Reply 96):
..and while we are at it, if we are going to do these two things, we might as well include New Zealand into any future framework and open up the skies between the two countries.

I thought that already effectively exists with the SAM - the Single Aviation Market - or am I missing your point?

Quoting travelhound (Reply 96):
I can only see good news for VA's current woes!

If any of the present scenarios work out - Singapore and/or Delta - then yes, I think it would pretty good news.

The other interesting that comes out of it is that the Virgin share on on the open market is presently about 34 cents per share.

However, Singapore paid 46.7 per share for its (admittedly small) recent purchases:

"Singapore Airlines said it had elected to physically settle a series of equity swaps it had entered into with a counter-party at a cost of A$3.18 million, or 46.72c a share. That represents a significant premium to Virgin's closing price of 35.5c on Wednesday."

If they paid that price for the bulk block, Air NZ would come out at about breakeven plus on it's Virgin adventure.

But the basic takeaway is:

"So if one wanted to draw a 'loose' conclusion from last night's announcement, it's that Singapore Airlines does not seem to have objections to injecting further cash into Virgin," Citi said."

mariner
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 08, 2016 1:32 am

Quoting aryonoco (Reply 97):
If we as a country can't do really simple things like reforming/repealing the QSA, it makes me wonder, how are we ever going to tackle the huge challenges that are waiting for us in the 21st century (climate change, aging population, etc)?

Everything is a slow process, I suppose! These arguments have been around for years. In reality we would have to go back to the Hawke/Keeting days for any purist ideology in government.

Quoting mariner (Reply 98):
I thought that already effectively exists with the SAM - the Single Aviation Market -

I think the SAM can be expended so that flights between the two countries are treated like domestic fights.

Quoting mariner (Reply 98):
"So if one wanted to draw a 'loose' conclusion from last night's announcement, it's that Singapore Airlines does not seem to have objections to injecting further cash into Virgin," Citi said."

Yes, I agree. I think there is where the news story will ultimately head!
 
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 08, 2016 1:57 am

I am going out on a limb here.

For me, a truly competitive market is one where SIA buys out VA and QANTAS and ANZ merge, combined with greater access for other carriers to enter the domestic market (i.e. LionAir operating tag flights from Darwin to Cairns or operating in the North of Australia).

This would give both VA and QANTAS enough critical mass to survive a competitive onslaught and benefit Australia by opening up the north of Australia.

For New Zealand they would have greater access to the Australian market and benefit by having more exposure to Asian tourists, business opportunities.

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